Billion dollars’ vision to enrich India-Vietnam economic interests

Mr. Vaibhav Saxena, ex-Vice Chairman of the Indian Business Chamber in Hanoi

>> Increasing Vietnam-India Business Cooperation Opportunities

Mr. Vaibhav Saxena, ex-Vice Chairman of the Indian Business Chamber in Hanoi, discussed with our reporter future bilateral trade and investment scenarios through billion-dollar visions.

Regional investors are ramping up their presence in Vietnam’s M&A market. What is your take on it and how do you see India-Vietnam business relations moving ahead?

Countries like Japan and South Korea have been lead investors in Vietnam. As we see from their investment capital figures and number of investment projects, this provides a strong hold on the economic side. We have even seen in recent times that a few ASEAN players like Thailand and the Philippines have emerged as significant investors in Vietnam. Singapore, however, has been an important partner to route businesses and sustain fair business practices in the region.

The FDI outlook varies from country-to-country and their plans to generate sustainable growth worldwide and to explore the opportunities globally by sharing their expertise and products with partner nations. India and Vietnam are the region's golden swans, with abundant natural resources that could make them self-sufficient at times, as we saw during the previous pandemic situation.

The advantages of investing or doing business in India and Vietnam scale much above the shortcomings, which is clearly evident with their years of FDI sustainability, through which both countries have proved their honorable commitments. Although expectations rise at both ends as growth takes hold, they may be adjusted based on a shared understanding of social and business principles. In Asia, it is unique as each country has its own way of doing business and living. Reciprocity in understanding the cultural and corporate norms when businesses look at a foreign country is a key factor for success.

India has excelled in the past 75 years and now it has a key role in global economics, politics, and strategic capabilities. However, since India is a vast country in terms of land area as compared to several Southeast Asian countries, it has its own challenges in meeting the needs of a large chunk of the population. It is rapidly utilizing its domestic opportunities to the fullest extent, and managing a giant population creates significant impressions on the international consumer market and stabilizes its GDP with its huge import-export figures.

Indian industry's capabilities are quite advanced and have developed significantly with time. Human resources capacities in India offer a cost-effective and highly talented pool of professionals. Similar developments are seen with Vietnam as an excellent partner. Young India and young Vietnam are the backbone of the new India and next-gen Vietnam, which are dynamic, resourceful, sustainable, and global in vision. The enterprises in India have been deepening their roots in the Indian market and welcome the Vietnamese enterprises to explore mutual possibilities.

We will see a different India and a much more advanced Vietnam growing together at a rapid pace with blooming economic ties. Today we align to draw a clear path for tomorrow.

Could you kindly give us some insights about the current and future investment scenarios between India and Vietnam? What is your take on Adani Group’s ambition to tap into Vietnam’s industrial potential?

As of February 2022, India’s investment in Vietnam stands at 315 valid projects worth more than US$918 million, mostly in the processing industry, manufacturing, electricity production and distribution, and mining. If we see the broader picture, then India’s investment in Vietnam from third countries comes to around US$1.9 billion. Vietnam, on the other hand, has 06–09 investment projects, mainly wholesale and retail ones, in India, whose total value exceeded US$6 million, with a potential of up to US$28.5 million.

Looking at bilateral trade figures, according to data from the Indian Ministry of Commerce and Industry, trade turnover between the two nations reached US$14.13 billion in the fiscal year 2021-2022. along with commitments to raise two-way trade to US$15 billion in 2022.

On one hand, in fiscal year 2021-22, key items of exports from India to Vietnam included iron and steel, cotton, cereals, meat and fishery products, electrical machinery and equipment, machinery and mechanical appliances, auto parts, articles of stone, cement, plaster, paper and paper articles, inputs for leather articles, chemical products, organic and inorganic chemicals, pharmaceutical products, minerals and their products, as well as animal feed.

A joint venture between Adani Group and Vietnam’s Anh Phat Investment Construction & Trading JSC has been given the green signal by the authorities of Da Nang to ascertain the feasibility of the development of a major seaport in the central city.

On the other hand, key items of imports into India from Vietnam were electrical and electronic equipment; chemicals; machinery and mechanical appliances; articles of plastic; copper and rubber; coffee, tea, and spices; iron and steel and their articles; footwear; fertilizers; animal feed; inorganic chemicals; metals; silk; optical, medical, and surgical equipment.

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Further, under the Mekong Ganga Cooperation (MGC) framework, India has been taking up Quick Impact Projects (QIPs), each valued at US$50,000, in different provinces of Vietnam for the development of community infrastructure. This initiative will surely have a significant impact at the grassroots level.

In order to realize big dreams for mutual business cooperation, it is essential to focus on capacity building. India supports the noble cause under a programme named Indian Technical and Economic Cooperation (ITEC). Under the ITEC, India has offered short-term courses in Indian institutions to nearly 3,000 Vietnamese participants over the years. Also, the Indian Council of Cultural Relations offers nearly 50 scholarships for Vietnamese scholars every year.

On a related note, Indian authorities and businesses wish to have a greater presence in Vietnam by cooperating with local enterprises in the form of M&A or greenfield investments in the possible potential sectors. The re-opening of commercial air routes and the announcement of the addition of more destinations by the cost-effective airlines With the recent launch of VietJet and the premium national carrier, Vietnam Airlines, regular flights between Vietnam and India will bring the two countries closer for mutual cooperation at a breakneck speed.

It is worthy to note that on June 02, 2022, the Prime Minister of Vietnam issued Decision 667/QD-TTg approving the nation’s strategies on foreign investment cooperation for the period 2021–2030. The said decision includes a number of objectives, one of which is raising the ratio of registered investment capital from countries and territories of some specified regions to more than 70% by 2025 and 75% by 2030, wherein, among others, India is given focus from Asia.

Several major enterprises from India, such as Adani Group, Mahindra, SRF Chemicals Ltd., and Suzlon, are also keen on investing in Vietnam with a diversified investment portfolio, according to the Indian Industries Association.

Recently, the Adani Group, a multinational conglomerate founded in 1988, with a market capitalization exceeding US$261 billion and a presence in over 50 countries worldwide, chaired by Indian billionaire Shri. Gautam Adani, pledged to invest US$10 billion in several key sectors in Vietnam. The US$10 billion for Vietnam is part of the US$100 billion worth of the group’s idle investment that it wishes to invest overseas by 2026.

To commence with Adani’s plans, a joint venture between Adani Group and Vietnam’s Anh Phat Investment Construction & Trading JSC has been given the green signal by the authorities of Da Nang to ascertain the feasibility of the development of a major seaport in the central city. Lien Chieu Port will be capable of handling 3.5–5 million tonnes of cargo annually in the first phase, and it can accommodate vessels of up to 100,000 tonnes and container ships of up to 8,000 TEU. Deep-water ports are critical for Vietnam.

On one hand, Vietnam’s economy resumed fully this year and businesses are getting busier. On the other hand, the country is working on policies for key sectors such as power and energy, banking and finance, etc. In the current state of transitional turmoil, the market awaits clarity on the regulations to implement mutually agreed goals.